Diamond quits in Barclays boardroom bloodbath

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Barclays bank chief executive Bob Diamond, pictured in 2009, resigned on Tuesday, caving in to political pressure over a rate rigging scandal which may trigger criminal charges and is bringing the City of London into disrepute.

Barclays chief executive Bob Diamond resigned on Tuesday, followed a few hours later by the bank's chief operating officer, in a deepening scandal over the rigging of key interest rates.

The latest resignations took to three the number of senior Barclays staff to have quit in the last two days over revelations that the bank's traders lied about the interest rates it was being charged by other banks.

Diamond and chief operating officer Jerry del Missier stepped down a day after Barclays chairman Marcus Agius resigned amid an intense and deepening political row over standards in the City of London financial sector.

On Tuesday, Barclays said del Missier had interpreted a note from Diamond as suggesting that the Bank of England (BoE) wanted it to manipulate the key Libor inter-bank interest rate.

Diamond had held a phone call with the BoE's deputy governor Paul Tucker in 2008 in which Tucker told Diamond that Barclays' submission did not always need to be as high as it was.

Barclays said that from this, "del Missier concluded that an instruction had been passed down from the Bank of England not to keep Libors so high and he therefore passed down a direction to that effect."

However, the bank added that: "Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier."

Del Missier was president of the firm's investment banking arm Barclays Capital at the time. He only took up his new job last month.

Barclays was last week fined a total of £290 million ($455 million, 360 million euros) by British and US regulators for attempted rigging but could face much higher costs if sued over the affair.

The scandal, which may implicate other international banks and trigger criminal prosecutions, concerns manipulation of the Libor interbank lending rate and its eurozone equivalent, Euribor.

The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.

Manipulating the rate could have given the impression that the bank was in a stronger position financially than it actually was.

Raising suspicions of possible wider rigging, it emerged at the weekend that bailed-out Royal Bank of Scotland had sacked four traders over their alleged involvement in a similar affair.

Diamond was due to face questions from British lawmakers on Wednesday over the affair.

High-profile and highly paid, Diamond eventually caved in to heavy political pressure even though it was thought that he might hang on to his job after Agius resigned on Monday.

Some analysts said that this was intended to shield Diamond, seen by some as a genius with the golden touch and others as an overpaid and overbearing banker.

Agius is staying on to lead the hunt for a new chief executive, while Diamond and del Missier have stepped down with immediate effect.

Giving reasons for his own departure, US national Diamond said in a statement earlier: "The external pressure placed on Barclays has reached a level that risks damaging the franchise -- I cannot let that happen."

British Chancellor of the Exchequer George Osborne welcomed Diamond's resignation.

"I think it's the right decision for Barclays. I think it's the right decision for the country. I hope it's a first step towards a new culture of responsibility in British banking," he told BBC radio.

The resignations come after Britain's Serious Fraud Office announced that it is considering bringing criminal prosecutions over the scandal, while Prime Minister David Cameron has announced a parliamentary inquiry.

Lawmakers will vote Thursday on whether to back calls from the opposition Labour party to set up a judge-led inquiry into the scandal, similar to the press ethics probe triggered by phone-hacking at Rupert Murdoch's media empire.

Barclays said on Monday it would launch an independent audit into "all of the past practices that have been revealed as flawed since the credit crisis started" about five years ago.

The debacle has drawn condemnation from across the political spectrum, while the chairman of regulator the Financial Services Authority, Adair Turner, spoke out against the "cynical greed" of those fixing Libor rates.

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